Before we get into the main four options to purchase, there is no such thing as a holding deposit (to secure a property off the market) and no prudent vendor would agree to taking their property off the market with no commitment from the buyer. The law says that any initial deposit (some agents call a holding deposit) without a signed and exchanged contract must be refunded in full.
1.) Email the agent an offer with your preferred terms and the price you are prepared to pay. This should be enough to get the negotiations rolling and for your interest to be taken seriously by the agent and vendor.
2.) Public auction is another way many people offer their property for sale and when a registered bidder offers the highest price above the reserve and the hammer falls, then the winning bidder is obligated to sign an unconditional contract even if they don’t yet have formal finance approval.
3.) Sign a contract and pay a minimum of 0.25% of the contract price and give this to the agent to see if the vendor will agree to exchange contracts on a 5 day cooling off period.
If the vendor signs an identical contract to the one you put forward and both contracts are dated, you will have just secured your next purchase to carry out your final queries prior to committing to the purchase unconditionally within the agreed cooling-off period which is usually 5 business days from the date on the contract.
The main queries investigated during this period are:
i.) Legal council (solicitor/conveyancer) reviewing the contract terms and conditions,
ii.) Strata search (if strata titled)
iii.) Building and or Pest inspections
iv.) Formal finance approval
If you decide not to proceed with the purchase for any reason during your 5 business day cooling-off period you will forfeit 0.25% of the contract price. This is compensation for the owner to take their property off the market and also void any other higher offers that may come in during this period.
For example, if you agreed to purchase a property for $1,000,000 and contracts were exchanged, then 0.25% being $2,500 would be required and given to the vendor as compensation if you decided not to proceed with the purchase before the expiry of the cooling off period.
4.) The strongest type of offer you can make to give yourself the best chances of securing a property is to have your legal advisor sign a Section 66w Certificate for the property you want to purchase. Sign the contract and provide the agent with the required deposit outlined on the front page of the contract, usually 10% of the contract price. In some cases an owner may consider exchanging on 5% if the settlement period is longer than usual or if the price and terms of the contract are strong enough to warrant such agreement.